Daniel is due to receive the balance of his trust fund in 5 years;as a result he has taken out a(n)________ mortgage where he has made small payments for several years and will pay off the balance in one large payment with his trust funds.
A)ARM
B)graduated payment
C)shared appreciation
D)fixed rate
E)balloon payment

Question

Quizplus · Accepted Answer

A balloon payment mortgage is characterized by small payments before a larger payment due at the end of the mortgage term, which is precisely what Daniel needs to repay the mortgage loan when he receives his trust funds. An ARM is an adjustable-rate mortgage, a graduated payment mortgage allows for increasing payments over time, a shared appreciation mortgage involves sharing the equity with a lender, and a fixed-rate mortgage has the same payment amount throughout the life of the loan, none of which match Daniel's situation.

Daniel Is Due to Receive the Balance of His Trust